Wall Street Gurus Should Be Ashamed for Wrongly Predicting Imminent Recession
Key Highlights :
The US economy has been on a rollercoaster ride in the last year, with predictions of an imminent recession being made by Wall Street gurus in June 2023. However, the economic data released since then has shown that the US economy is still growing, with services sector expansion, historically low unemployment, and low inflation. Despite this, there have been signs of weakness in the housing market and tech sector, however, these are not enough to suggest a recession is imminent.
Unfortunately, despite the evidence, hardly anyone has come forward to admit they were wrong in their predictions. This is particularly concerning given the influence that Wall Street gurus have on the economy, and the potential damage that can be done by incorrect predictions.
The latest US government data shows the economy grew 1.5% in the first quarter, which is down from 2.6% in the three months through December 31. The services sector, which includes banking, advertising, and other important industries, is still expanding, with the S&P Global US Services PMI increasing to 55.1 in May 2023. This is an important indicator as services account for almost four-fifths of the overall economy. Unemployment remains historically low, with the unemployment rate hitting 3.4% in April, which is lower than the 3.6% we saw last June. New claims for unemployment insurance also remain relatively low this year, no exceeding 250,000 a week.
Inflation hit a recent low of 4.9% in April, down from 9.1% last June. This is a positive sign for the economy, as it means people have more money to spend, which can stimulate economic growth.
However, there are some indications of weakness in the housing market, largely caused by soaring borrowing costs and lack of available credit from the banks. The tech sector is also going through some tumult, but this is the first major downsizing in two decades, and is something that periodically needs to happen in an industry that requires an ongoing cycle of innovation, disruption and destruction.
Overall, there are still few signs that the economy will contract in the few weeks ahead, and yet hardly anyone has come forward to admit they were wrong in their predictions of an imminent recession. This is concerning, as Wall Street gurus have the potential to influence the economy with their predictions, and incorrect predictions can lead to damaging consequences. It is therefore important that they take responsibility for their predictions, and admit when they are wrong.
